A key criticism of President Masisi has been that apart from reversing former President Khama administration decisions, he offers nothing else. This is misplaced sentiment- I would rather accept argument that his roadmap and achievements so far are not as well articulated or packaged as they should be.
But this is not out of want for effort or strategy. A great strategy is in place- it hinges on a liberal approach to both security and economics but with a premise for a strong, efficient social security system. With these come investor and consumer confidence. When investors are confident they invest and create jobs; when consumer spending increases the economy experiences growth and jobs are created.
The fuel for this strategy is a clear emphasis on giving people hope, and confidence in their government and country. Where there is hope, one is less likely to be reckless even if today may not be a particularly great day. After all, they have hope and a belief that the following day or the day after would turn out better. Such is the impact of renewed hope and confidence.
Hope. Just a word? I do not think so. “I have always believed that hope is that stubborn thing inside us that insists, despite all the evidence to the contrary, that something better awaits us so long as we have the courage to keep reaching, to keep working, to keep fighting,” Barack Obama, himself a purveyor of hope has previously written. This nation right now needs that stubborn believe in that things can and will be better.
This does not mean sitting and doing nothing. We have to work, we to each do our part. The facilitator function of government needs to be forth coming. And out of it all comes confidence. To get working though, there are structural issues that we must take care of. These range from domestic policy and legislative matters to our standing internationally.
Such hope and confidence should not only be on the economy- it should also be in terms of politics. Those that argue that President Masisi is busy fighting intra-party battles and forgetting the economy are wrong- or at the very least do not have a thorough appreciation of both how the politics and the economy works.
For one, if there is uncertainty in terms of the political future of the Republic many an investor will shun to plough in their investment. Even domestic investors may hold on to whatever money they have out of fear that the environment offers no guarantees that their investment will be allowed to nestle and nurture. You want to put your money when you understand the philosophy of those in governance and when you know that there will be political stability.
It is therefore reasonable that he fight and win the political battle. How do you convince anyone to do business under your administration when there is daily news of a likelihood of you being removed from your seat? It is a difficult job. Critics also fail to understand that President Masisi is a politician. He is in power as a consequence of politics and he’ll stay in power on basis of the political dynamics. It is therefore only reasonable that he stays seized with matter of politics; and campaign hard to maintain his seat and give a chance to his ideas.
To implement his ideas on the economy and other sectors, he needs to have peace of mind in knowing that his tenure as a political man is secure. It would be ill strategy to pretend that all one has to do is focus on job creation and fighting corruption in order to secure their seat. Yes, that is one of the things we know he regards highly, but he must first survive if he is to see his ideas take shape.
Back to the economy. If you study any serious economy, you’d realize capital markets provide financing for businesses to fund their growth to facilitate both innovation and job creation. In turn, the capital markets depend largely confidence from investors and consumers. Those trading in issuing and trading equity or debt securities require certainty that their investments will be protected. Such investments may only be protected where you have the rule of law as an important aspect of governance.
Constant statements on the importance of the rule of law, consultations to preserve democratic ethos, a crusade against corruption among other confidence building initiatives are actually contributing to the macroeconomic fundamentals that we crave such as job creation, industrialization and growth. Most recent is also news of our signing up to the African Peer Review Mechanism. We are signing more up to international instruments and this gives investors’ confidence that we are not but just another rogue or pariah state.
This builds confidence and with it comes investment and jobs; at the very least, this prepares the ground for investment. If an administration is not able to engender confidence, the markets suffer and when the capital markets suffer so do job seekers. There is no running away from it. Consumer confidence is also a function of the political, and hope. Consumers’ outlook towards the economy and their own personal financial situations tend to either be optimistic or pessimistic.
Yet their confidence is an important factor that determines the willingness of consumers to spend, borrow and save. A high level of consumer confidence usually leads to a higher propensity to consume. We need consumers to be update about the future if they are to spend their money. We need them to spend their money to create jobs and grow the economy.
Most recently, we have seen salary increments for civil servants that will effect over two financial years- this gives confidence to consumers that their purchasing power will improve; and with it comes heightened expenditure and possible positive impacts on the economy. When people say ‘he is busy with politics’ and not bread and butter issues I often worry as to their understanding of the economy.
When you make entry into the country for investors less stringent, less subject to arbitrariness at the whim of those doing security vetting, you are basically opening up the country to investment from outside. That is a real effort at helping the economy kick. Ask anyone at immigration and they’ll tell you it is no longer as hard as it was for serious investors to get visas.
And of course there is the ‘small matter of the holy waters’. Increasing the hours of trading for alcohol and entertainment vending can only lead to more revenue for pub operators as they now can sell till a little later. The scrupulous among these would hire more people to work shifts thus increasing numbers of those getting jobs.
This presidency provides renewed hope for those who were previously excluded. A natural consequence of a transition is that it may lead to flows of cash diverting to people who previously did not have as much money flowing to them. We do not have to like it but it is true that in the wake of a new administration there will also be new economic beneficiaries.
This is a form of redistribution of the resources of the country. A new crop comes in and the old crop, if proper investors, are able to invest the money they have amassed over the past decade to open up industries hence create jobs also since they can no longer depend on rent seeking from the state given their loss of privileges.
Many may say but hope is not anything tangible. It need not be tangible. There is a feel food factor around the country. There is a feeling that one of us is in power; and with it feelings of patriotic duty to do one’s best to deliver wherever they are. This is what we need in the Presidency- a person who will make others feel good and want to improve their own circumstances.
There is real progress in the country towards jobs and economic growth. Perhaps what ought to happen is for the Presidency to communicate achievements without being shy; to also ensure that there is accurate and up-to-date data that can inform trends on job creation every month or even two. This would improve perception of ‘nothing being’ done to create jobs for instance. This being as it may be, we should not forget the importance of the ‘audacity of hope’.
The world in which we live is a criminally unequal one. In his iconic 1945 allegorical novella, Animal Farm, a satire on the facetiousness of the then Soviet Empire’s crackbrained experiment with a command economy, the legendary George Orwell in my view hit the nail squarely on the head when he said all animals were equal but some animals were more equal than others.
That’s the never-ending dichotomy of the so-called First World and its polar opposite, the so-called Third World as Orwell’s cleverly-couched diatribe applies as much to the tread-of-the-mill laissez faire economics of our day as it did to Marxist-Leninist Russia a generation back.
Even as the Nation of Israeli braced to militarily take possession of the Promised Land, General, its top three senior citizens, namely Moses, Aaron, and Miriam, were not destined to share in this god-conferred bequest. All three died before the lottery was won.
Financial Reporting (Amendment) Bill, 2020 and Accountants (Amendment) Bill, 2020 were expeditiously passed by parliament on Thursday.
What are these two Bills really about? The Bills are essentially about professional values that are applicable to auditors and accountants in their practice. The Bills seeks to basically enhance existing laws to ensure more uprightness, fairness, professional proficiency, due care, expertise and or professional technical standards.
The Financial Reporting Act, 2010 (FRA) establishes the Botswana Accountancy Oversight Authority (BAOA), as the country’s independent regulator of the accounting and auditing profession. BAOA is responsible for the oversight and registration of audit firms and certified auditors of public interest entities.
In the same vein, there is the Accountants Act, 2010 establishing the Botswana Institute of Chartered Accountants (BICA) which is responsible for the registration and regulation of the accounting and auditing profession. This consequently infers that some auditors have to register first with BICA as certified auditors, and also with BAOA as certified auditors of public bodies. So, the Bills sought to avert the duplication.
According to Minister Matsheka, the duplication of efforts in the regulation of auditors, which is done by both BICA and BAOA, creates a substantial gap on oversight of certified auditors in Botswana, as the two entities have different review procedures. He contends that the enforcement of sanctions becomes problematic and, thus, leads to offenders going Scot-Free, and audit quality standards also continue to plunge.
The Financial Reporting (Amendment) Bill, 2020, in the view of the Minister, brings the oversight and regulation of all auditors in Botswana under the jurisdiction of the Accountancy Oversight Authority and that Bringing all auditors within one roof, under the supervision of BAOA would therefore reinforce their oversight and significantly enhance accountability.
He also pointed that the Bill broadens the current mandate of the Authority by redefining public interest entities to include public bodies, defined as boards, tribunals, commissions, councils, committees, other body corporate or unincorporated established under any enactment.
This covers any company in which government has an equity shareholding. In order to enable the process of instituting fitting sanctions against violation of its provisions, the Bill clearly lays down acts and lapses that constitute professional misconduct.
This Bill further strengthens the sanctions for breach of the Act by public interest entities, officers, firms, and certified auditors. Reinforcing the law with respect to such sanctions will act as an effective deterrent for breach of the Act.
The Accountants Bill also strengthens the current mandate of the Institute by making it obligatory for those who provide accountancy services in Botswana to register with the Institute, and for all employers to hire accountants who are registered with the Institute.
The Minister reasons that in line with the spirit of citizen empowerment, this Bill proposes reservation of at least 50% of the Council membership for citizens. This, he says, is to empower citizens and ensure that citizenries play an active role in the affairs of the Institute, and ultimately in the development of the accounting profession in Botswana.
The Bills come at a point when Botswana’s financial sector is in a quagmire. The country has been blacklisted by the European Union. Its international rankings on Corruption Perception Index have slightly reduced. According to recent reports by Afro Barometer survey, perceptions of corruption in the public service have soured and so is mistrust in public institutions.
Rating agencies, Standard Poor’s and Moody’s have downgraded Botswana, albeit slightly. The reasons are that there continues to be corruption, fiscal and revenue crimes such as money laundering and general unethical governance in the country. There are still loopholes in many laws despite the enactments and amendments of more than thirty laws in the last two years.
One of the most critical aspect of enhancing transparency and accountability and general good governance, is to have a strong auditing and accounting systems. Therefore, such professions must be properly regulated to ensure that public monies are protected against white color crime. It is well known that some audit firms are highly unprincipled.
They are responsible for tax avoidance and tax evasions of some major companies. Some are responsible for fraud that has been committed. They are more loyal to money paid by clients than to ethical professional standards. They shield clients against accountability. Some companies and parastatals have collapsed or have been ruined financially despite complementary reports by auditors.
In some cases, we have seen audit firms auditing parastatals several times to almost becoming resident auditors. This is bad practice which is undesirable. Some auditors who were appointed liquidators of big companies have committee heinous crimes of corruption, imprudent management, fraud and outright recklessness without serious consequences.
There is also a need to protect whistleblowers as they have been victimized for blowing the whistle on impropriety. In fact, in some cases, audit firms have exonerated culprits who are usually corrupt corporate executives.
The accounting and auditing professions have been dominated by foreigners for a very long time. Most major auditing firms used by state entities and big private sector companies are owned by foreigners. There has to be a deliberate plan to have Batswana in this profession.
While there are many Batswana who are accountants, less are chartered accountants. There must be deliberate steps to wrestle the profession from foreigners by making citizens to be chartered. It is also important to strengthen the Auditor General. The office is created by the constitution.
The security of tenure is clearly secured in the constitution. However, this security of tenure was undermined by the appointing authority in many instances whereby the Auditor General was appointed on a short-term contract. The office is part of the civil service and is not independent at all.
The Auditor General is placed, in terms of scale, at Permanent Secretary level and is looked at as a peer by others who think they can’t be instructed by their equivalent to comply. Some have failed to submit books of accounts for audits, e.g. for special funds without fear or respect of the office. There is need to relook this office by making it more independent and place it higher than Permanent Secretaries.